Satish Chand Gupta vs The Presiding Officer, Delhi ...
2009 Latest Caselaw 1522 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

+     WRIT PETITION (CIVIL) 4858/1995, CM 5702/2006,
      CM 9953/2006 & CM 10388/2008

                              Reserved on :      4th March, 2009
                           Date of Decision :    20th April, 2009

      SATISH CHAND GUPTA                          ...... Petitioner

                         Through : Mr. A.K. Singla, Sr. Adv. with
                                   Mr. Pankaj Gupta and Mr. J.K.
                                   Sharma, Advs.

                  versus

      THE PRESIDING OFFICER, DELHI CO-OPERATIVE TRIBUNAL
      & ORS.                            ...... Respondents

                         Through : Mr. Rakesh Munjal, Sr. Adv. with
                                   Mr. Rajiv Vig and Ms. Aprajita
                                   Mukherjee, Advs. for Respondent-
                                   Society.
                                   Mr. Sudhir Nandrajog, Adv. for
                                   Applicant in CM No. 10388/2008.



    % CORAM:
      HON'BLE MR. JUSTICE MADAN B. LOKUR
      HON'BLE MR. JUSTICE SIDDHARTH MRIDUL

      1.   Whether reporters of local papers may be allowed to see
           the judgment?                                              YES
      2.   To be referred to the Reporter or not?                     YES
      3.   Whether the judgment should be reported in                 YES
           the Digest?
                           JUDGMENT

SIDDHARTH MRIDUL, J.

1. By way of the present petition under Article 226 of the

Constitution of India the Petitioner, inter alia, prays for setting aside

the order dated 24th October, 1995 passed by the Delhi Co-operative

Tribunal, Respondent No.1 herein, confirming the order dated 25th

April, 1995 passed by the Registrar, Co-operative Societies,

Respondent No.2 herein, whereby the expulsion of the Petitioner from

membership of Central Delhi Co-operative Group Housing Society

Limited (in short „Society‟), Respondent No.3 herein, was upheld as

well as for seeking a declaration that the Petitioner is a member and

continues to be a member of the Respondent No. 3-Society with all

rights and privileges.

2. The facts as are necessary for the adjudication of the present

petition are that:

a) The Respondent No.3-Society was allotted land in Plot

No. 1, Sector-14, Rohini, Delhi-110085, for construction of

residential flats for its members.

b) The Petitioner had become a member of the Respondent

No.3-Society in the year 1979.

c) The Petitioner was sent various notices and circulars

under registered post as well as certificate of posting for

the payment of dues.

d) On the 11th August, 1991 the Petitioner was sent a

registered letter by the Society requesting him to clear all

his dues so that his name could be included in the draw of

lots. In the said letter the Petitioner was informed that a

sum of Rs.2,91,003/- was due and payable by him. The

remaining 89 members of the Society who had already

paid their dues had flats allotted to them in their names on

the 10th November, 1991.

e) Another letter dated 23rd February, 1992 was sent to the

Petitioner under certificate of posting, informing the latter

that a sum of Rs.3,53,886/- was due from him as per the

circular dated 15th December, 1991. Thereafter the

Respondent No.3-Society sent a letter dated 14th March,

1992 under certificate of posting requesting the Petitioner

to pay a sum of Rs.3,72,622/- by the 31st March, 1992.

Another letter dated 12th April, 1992 was dispatched under

registered post and certificate of posting as the first

reminder sent to the Petitioner. Thereafter another

reminder was sent on 30th April, 1992 under registered

post as well as under certificate of posting raising a

demand of Rs.3,72,602/- and requesting the Petitioner to

pay the said amount. However, the Petitioner did not pay

the said amount.

f) The Managing Committee of the Society in its meeting

held on 4th August, 1992 decided to expel the Petitioner

from the membership of the Society as he was a persistent

defaulter.

g) A notice of expulsion dated 4th August, 1992 was sent to

the Petitioner in which he was informed that he would be

expelled by the General Body of the Society on the 6th

September, 1992. Thereafter notice dated 18th August,

1992 was sent to all the members of the Society under

certificate of posting about holding of the General Body

meeting. Eventually, the Petitioner was expelled by the

General Body in its meeting held on 6th September, 1992.

After the expulsion of the Petitioner by the General Body

of the Society a reference was made to the Registrar, Co-

operative Societies, Respondent No.2 herein, on 11th

September, 1992 for approval of the said expulsion.

h) In the meantime, the Petitioner had also received the

letter dated 23rd January, 1992, sent by the office of the

Registrar to the former, asking him to square up all his

dues and furnish the requisite affidavit.

i) The Petitioner received a letter dated 12th November,

1992 from the office of the Respondent No.2 informing the

Petitioner of a final opportunity to explain before the

Registrar on the 18th November, 1992 with respect to the

expulsion of the Petitioner from the membership of the

Respondent No.3-Society on the basis of the persistent

default.

j) The Petitioner aggrieved by the subsequent order of the

Respondent No.2 filed an appeal under Section 76 of the

Delhi Co-operative Societies Act, 1972 (in short „Act‟)

before the Lieutenant Governor of Delhi. The appeal filed

on behalf of the Petitioner was allowed vide order dated

6th January, 1993 and the matter was remanded to the

Respondent No.2 for passing a fresh order after giving

opportunity to the Petitioner to represent his case.

k) The Respondent No.3 vide the impugned order dated

25th April, 1995 after hearing the parties afresh directed

the Petitioner to pay the dues outstanding against him by

the 30th June, 1995 failing which the Petitioner was to be

deemed to have been expelled from the membership of the

Society. In the said impugned order dated 25th April, 1995

the Respondent No.3 came to the following findings:

(i) From the reference of the case, it was evident that

three notices as required under the Rules were sent

to the Petitioner.

(ii) These notices were sent by registered post as well as

UPC.

(iii) It was on record that the Petitioner had only paid a

sum of Rs.92,000/- and that the loan from the

DCHFS to the tune of Rs.90,634/- for the Petitioner

had been arranged by the Society.

(iv) As far as the delay charges of 3 per cent per month

were concerned, the same had been charged by the

Managing Committee from other members of the

Respondent No.3-Society also who had defaulted in

making the payment and the same was duly

approved by the Managing Committee.

(v) It was also held in the impugned order that the

arbitration case filed by the Petitioner in respect of

the cost of the flat was pending in the court of

Assistant Registrar but that had nothing to do with

the present case.

l) Aggrieved by the impugned order dated 25th April, 1995

the Petitioner preferred an appeal under Section 76 of the

Act impugning the said order dated 25th April, 1995.

m) On behalf of the Petitioner it was urged before the

Respondent No.1 that the impugned order dated 25th April,

1995 had wrongly held that the arbitration case with

regard to the cost of the flat pending before the Assistant

Registrar had nothing to do with the present case. It was

next contended that the learned Registrar had also

wrongly held that due opportunity was given to the

appellant before passing of the resolution by the General

Body. Lastly, it was argued on behalf of the Petitioner that

the rate of interest applied by the Society was exorbitant.

The Respondent No.1 rejected the appeal and directed

that 60 days‟ time was further given to the Petitioner to

make the remaining payment, failing which the order of

expulsion shall be deemed to have been confirmed.

(n) The Respondent No.1 in the impugned order dated

24th October, 1995 came to the following findings:

(i) It has been clearly held by the learned Registrar in

the impugned order dated 25th April, 1995 that it

stood proved from the record that three notices were

issued to the appellant through registered post and

UPC, and that being so, this finding of fact remained

undisputed, as its veracity could not be challenged

successfully by the Petitioner.

(ii) So far as the challenge to the rate of interest was

concerned, the Respondent No. 1 found that, the

observation by the Society that the same rate of

interest has been charged from other similarly

situated members and that the Petitioner has not

been discriminated against could not be met on

behalf of the Petitioner.

(iii) Both these points were, therefore, decided against

the Petitioner.

(iv) It was also held in the impugned order dated 24th

October, 1995 that the plea of pendency of the

arbitration case and its relevance with the present

case was squarely out side the scope of the

proceedings and could not be taken into

consideration in view of the remand order passed

earlier by the Lt. Governor.

o) Aggrieved by the impugned orders dated 25th April, 1995

and the 24th October, 1995, and without depositing the

remaining payments with the Respondent No.3-Society,

the Petitioner preferred the present petition.

3. Mr. A.K. Singla, learned senior counsel appearing on behalf of

the Petitioner argued that, the procedure for expulsion under Rule 36

and the directives issued by the Registrar in terms of Rule 77 had not

been complied with by the Respondent No.3-Society, in expelling the

Petitioner from the membership of the Society, and as such the

expulsion was violative of statutory rules and directives. It was

secondly argued by the learned senior counsel appearing on behalf of

the Petitioner that the Respondent No.3-Society and its Managing

Committee had committed illegal acts and deeds which had been

challenged by the Petitioner and therefore the Respondent No.3-

Society had resorted to the expulsion of the Petitioner in order to

cover up for their liability for misapplication and misappropriation of

funds of the Respondent No. 3-Society.

4. On the other hand Mr. Munjal, learned senior counsel appearing

on behalf of the Respondent No.3-Society argued that the

Respondent No.3-Society had complied with the requirements of Rule

36 of the Act and the rules framed thereunder, and that the directives

issued by the Registrar under Rule 77 were only for administrative

convenience and therefore not binding. It was next argued on behalf

of Respondent No.3-Society that the Petitioner had not made any

payments since the year 1988 and had filed the present writ petition

just to delay the payment of the dues which were allowed to be paid

by the Petitioner in terms of the order dated 24th October, 1995.

5. Before embarking on the merits of the rival submissions it would

be relevant to extract Rule 36 of the Delhi Co-operative Societies

Rules, 1973:

"36. Procedure for expulsion of members:

(1) Not withstanding anything contained in the bye-laws, any member who has been persistently defaulting in payment of his dues or the payment of claims made by a housing society for raising funds to fulfil its objects, has been failing to comply with the provisions of the bye-laws regarding sales of his produce through the society or, other matter in connection with his dealings with the society or who, in the opinion of the committee, has brought disrepute to the society or he has done other acts detrimental to the interest or proper working of the society, the society may, by a resolution passed by a majority of not less than three fourth of the members entitled to vote who are present at a general meeting, held for the purpose, expel a member from the society.

Provided that no resolution shall be valid, unless the member concerned has been given an opportunity of representing his case to the general body and no resolution shall be effective, unless it is approved by the Registrar.

(2) Where any member of a co-operative society proposes to bring a resolution for expulsion of any other member, he shall give a written notice thereof to the President of the Society. On receipt of such notice or when the committee itself decides to bring in such resolution, the consideration of such resolution shall be included in the agenda for the next general meeting and a notice thereof shall be given to the member against whom such resolution is proposed to be brought, calling upon him to

be present at the general meeting, to be held not earlier than a period of one months from the date of such notice and to show cause against expulsion to the general body of members. After hearing the member, if present, or after taking into consideration any written representation which he might have sent, the general body shall proceed to consider the resolution.

(3) When a resolution passed in accordance with sub rule (1) or (2) is sent to the registrar or otherwise brought to his notice, the Registrar may consider the resolution and after making such enquiry as to whether full and final opportunity has been given under sub-rule (1) or (2) give his approval and communicate the same to the society and the member concerned with in a period of 6 months. The resolution shall be effective from the date of approval.

(4) Expulsion from membership involve forfeiture of shares held by the member. The share shall be forfeited with the prior permission of the Registrar. In that event, the value of the share forfeited shall be credited to the reserve fund of the society.

(5) No member of a co-operative society who has been expelled under the foregoing sub-rules shall be eligible for re-admission as a member of that society or for admission as a member of any other society of the same class for a period of three years from the date of such expulsion.

Provided that the Registrar may, on an application either by the society or the member expelled and in special circumstances, sanction the re-admission, within the said period, of any such member as a member of the said society or of any other society of the same class, as the case may be. Before giving such sanction for re- admission or admission by the Registrar, an opportunity of hearing may be given to both the society and member concerned."

6. It would also be necessary to extract the directives issued by the

Registrar under Rule 77 of the said Rules:

"(i) A letter raising demand to all members by UPC indicating date, amount and last date for making payment.

(ii) A first reminder for demand by Registered A.D. giving minimum 15 days time indicating date of issue as per Annexure-I to the directive.

(iii) A second reminder by Registered A.D.letter giving minimum 5 days time indicating date of issue as per Annexure-II to the directive.

(iv) A notice to the defaulter member for initiating his expulsion from membership on account of persistent default in terms of Annexure-V to the directive.

(v) Notice of General Body meeting for considering expulsion of the member as one of the items giving 7 clear days notice for meeting sent by UPC to all members and by Registered A.D. for defaulter members for presenting the case in the General Body meeting either in person or in writing in terms of Annexure-VI to the directive.

(vi) In case expulsion of the member proposed for expulsion by the General Body of the Society is approved by the office of the Registrar of Societies, the expelled member shall be informed by the Society in terms of Annexure-VII to the directive by Registered A.D. post."

7. Before we consider the merits of the rival submissions of the

parties it will also be necessary to refer to the judgments relied upon

by them.

1. In United Commercial Bank vs. Bhim Sain Makhija;

AIR 1994 Delhi 181, a Single Judge of this Court held that

where the requirement is service by registered AD a

notice issued by mere registered post is not proper and

does not amount to sufficient compliance of the provisions.

2. In LPA No. 97/1983 titled R.K. Aggarwal vs. Registrar,

Co-operative Societies, Delhi and Others a Division

Bench of this Court was pleased to observe this:

"By removing the name of a person from the membership, a valuable right is taken away from him. Moreover, the consequences of expelling a member are serious as is evident from perusal of Sub-Rule (5) of Rule 36 which provides that when a member is expelled he cannot be readmitted to the membership of that society at any point of time and nor can he become a member of any other society of this same class for a period of three years from the date of such expulsion. Grave consequences, therefore, ensue when a member is expelled. Under these circumstances, Rule 36 has to be strictly complied with and adhered to by a cooperative

society before it chooses to expel a member. We are not in agreement with the learned counsel for the respondents that Rule 36 is directory. In our opinion, it is incumbent upon the society to follow the letter of law and to comply meticulously with the provisions of Rule 36."

3. In Writ Petition (Civil) No. 4062/2004 titled Rajinder Pasricha vs. M/s Climex Co-operative Group Housing Society Ltd. and Another a Division Bench of this Court observed:

"It was in this background that the Registrar passed the impugned order on 11th November, 2003 holding that proper procedure has been followed as prescribed under Rule 36 of the Delhi Cooperative Societies Rule 1973 as Society has issued proper notice to the defaulter members through registered posts and have also produced proof of dispatch. A Society cannot achieve its objects of constructing the flats if timely payment was not made by the members. Appropriate procedure in accordance with law has been followed by the Cooperative Societies in expelling the petitioner on account of default. There is no discretion in the hands of the Registrar Cooperative Societies to allow said defaulter member to make payment and direct the Society to accept such member to be a member of the society. In any event such discretion has to be exercised keeping in view the objects of the Cooperative Society which cannot function and construct the flats if there is a default of even one single member as all the members who would be making payment of their share money and on account of defaults by other members in making the payment, a large number of members who are making the payment in time suffers on account of either imposition of the burden of interest or increase in the costs of construction."

4. In Satish Chandra and Another vs. Registrar of Co-

operative Societies; 1993(26) DRJ (DB) a Division Bench of this Court was constrained to observe that:

"The provisions of Delhi Co-operative Societies Act and Rules framed there under regarding expulsion of members particularly in relation to those who have defaulted in paying the call money by the society, have played havoc to the working of the societies in Delhi. Any member even if his contribution is bare minimum can thwart the process of expulsion on account of various procedural delays in the office of the Registrar, Co- operative Societies and on account of the provision of appeal in the Cooperative Societies Act. We feel that defaulter members should not put the society at ransom and the defaulter member to show his bona fide and equity must deposit the call money with the society under protest and only there the legitimacy of his claim could be examined by the Registrar. It should not be a device to keep one's foot in the society and wait for the completion

of the flats at the cost of others who have been regularly paying. After construction starts or is near completion the price of the flats escalates, then such defaulter members claim their right to own a flat. This will be giving premium to such kind of members for their default."

8. In the present case it is noticed that the Respondent-Society

wrote to the Petitioner on the 11th August, 1991, 23rd February, 1992,

14th March, 1992, 12th April, 1992 and the 30th April, 1992 raising

demands and requesting the latter to clear all his due so that his

name could be included in the draw of lots. However, the Petitioner

did not pay the said amount. Even the office of the Registrar of Co-

operative Societies addressed a letter dated 23rd February, 1992 to

the Petitioner asking the latter to square up all his dues and furnish

the requisite affidavit. However, the Petitioner did not pay the said

amount. The last payment made by the Petitioner before his expulsion

was on the 16th January 1988 and thereafter the Petitioner has failed

to make any payments to the Society till the time of the filing of the

present petition.

9. The Managing Committee of the Respondent-Society therefore

came to a conclusion that the Petitioner was a persistent defaulter

and as such in its meeting held on the 4th August, 1992 decided to

expel the Petitioner from the membership of the Society. In this behalf

a notice of expulsion dated 4th August, 1992 was dispatched to the

Petitioner informing him that the Petitioner would be expelled by the

General Body in its meeting held on the 6th September, 1992. Finally

the Petitioner was expelled by the General Body of the Respondent-

Society in its meeting held on the 6th September, 1992 and a

reference was made to the Registrar of Co-operative Societies on 11th

September, 1992 for approval of the said expulsion.

10. It is not the case of the Petitioner that the notices dispatched by

the Society were sent to incorrect address. It is his case that he did

not receive them. This cannot be believed for the reason that the

Petitioner admits receiving the letter dated 23rd January 1992 and the

letter dated 12th November, 1992 from the office of the Registrar of

Co-operative Societies which were dispatched to him at the same

address.

11. Furthermore, the authorities below have returned a concurrent

finding of fact that the three notices of expulsion as required under

the rules were sent to the Petitioner and this finding of fact remained

undisputed by the Petitioner before the authorities below. Resultantly,

the veracity of the Petitioner having received the notices could not be

challenged successfully by the Petitioner either before the Registrar

of Co-operative Societies nor before the Presiding Officer, Delhi Co-

operative Tribunal. We see no reason why this Court must not accept

the concurrent findings of facts as found by the forum below.

12. Insofar as the submission made on behalf of the Petitioner to the

effect that the procedure for expulsion under Rule 36 had not been

complied with by the Respondent No.3-Society is concerned it is

sufficient to note that the notice of expulsion dated 4th August, 1992

had been dispatched to the Petitioner more than 30 days before the

meeting in which the expulsion was to be considered to be held on 6th

September, 1992 and as such the submission made by the Petitioner

in this behalf does not hold any water.

13. The Petitioner‟s argument that the Respondent No.3-Society in

expelling the Petitioner from the membership of the Society did not

comply with directives issued by the Registrar in terms of Rule 77 is

an argument that has been made by the Petitioner for the first time

before this Court and had not been raised for consideration either

before the Registrar of Co-operative Societies or before the Presiding

Officer, Delhi Co-operative Tribunal in appeal. We do not see any

reason why the said argument should be considered by this Court for

the first time in the writ petition. Even otherwise from a plain reading

of the directives it is obvious that the same are directory and not

mandatory, inasmuch as, non-compliance of the said directives gives

rise to some penalty provided in the circular containing the directives

and does not render a breach thereof to invalidate the expulsion of the

member in persistent default. Therefore, in our opinion the directives

under Rule 77 have been issued only for administrative convenience

by the Registrar and are not binding so as to make them mandatory.

Even otherwise we are of the opinion that proper procedure had been

followed as prescribed under Rule 36 of the Delhi Co-operative

Societies Rules, 1973 and the Society has issued proper notices to the

defaulter-Petitioner through registered post and have also produced

proof of dispatch. As held by the Division Bench of this Court in

Rajinder Pasricha (supra) that "a society cannot achieve its objects of

constructing the flats if timely payment was not made by the members..........

In any event such discretion has to be exercised keeping in view the objects

of the Cooperative Society which cannot function and construct the flats if

there is a default of even one single member as all the members who would

be making payment of their share money and on account of default by other

members in making the payment, a large number of members who are

making the payment in time suffers on account of either imposition of the

burden of interest or increase in the costs of construction".

14. We are also conscious of what was stated by a Division Bench of

this court in Satish Chandra and Another (supra), where it was

observed that "the provisions of Delhi Co-operative Societies Act and Rules

framed there under regarding expulsion of members particularly in relation

to those who have defaulted in paying the call money by the society, have

played havoc to the working of the societies in Delhi. Any member even if his

contribution is bare minimum can thwart the process of expulsion on

account of various procedural delays in the office of the Registrar, Co-

operative Societies and on account of the provision of appeal in the

Cooperative Societies Act. We feel that defaulter members should not put

the society at ransom and the defaulter member to show his bona fide and

equity must deposit the call money with the society under protest and only

there the legitimacy of his claim could be examined by the Registrar. It

should not be a device to keep one's foot in the society and wait for the

completion of the flats at the cost of others who have been regularly paying.

After construction starts or is near completion the price of the flats

escalates, then such defaulter members claim their right to own a flat. This

will be giving premium to such kind of members for their default".

15. It is also noticed that the last payment was made by the

Petitioner in the year 1998 and even when the Petitioner was directed

to deposit the amount in Court in the present petition he deposited

only one third of what was due and payable at that point of time

according to the accounts of the Society.

16. In the result, we do not find any merit in the arguments

advanced by the Petitioner and therefore dismiss this writ petition

with costs of Rs.20,000/- (Rupees twenty thousand) to be deposited by

the Petitioner before the Registrar General of this Court within a

period of four weeks from today.

17. List for compliance on 25th May, 2009.

SIDDHARTH MRIDUL, J.

MADAN B. LOKUR, J.

April 20, 2009 mk